Despite a pause in U.S. tariffs, there is looming uncertainty and concern about how a potential trade war could hit Canada’s medicine supplies.
Canada has been given a 30-day reprieve from U.S. tariffs threatened by President Donald Trump, but that has done little to allay fears in the pharmaceutical realm.
“I think there’s a concern here that any sort of tariff war on this space could send ripples throughout the supply chain,” said Mina Tadrous, an assistant professor at the University of Toronto’s Leslie Dan Faculty of Pharmacy.
Tadrous told Global News the concern stems from the fact that the supply chain for medications is so global that the production of each drug crosses multiple borders before Canadians get the finished product from their local pharmacy.
“So, the structure of how tariffs work can have [an] add-on effect to how the drug pricing works,” he said.
In Canada, prices of pharmaceutical products are controlled by federal bodies.
The prices of patented, brand-name drugs are monitored by the federal government’s Patented Medicine Prices Review Board (PMPRB) and negotiated by the pan-Canadian Pharmaceutical Alliance (pCPA), which negotiates on behalf of Canada’s federal, provincial and territorial governments.
For non-brand name drugs, “reimbursed prices of generic prescription medicines are negotiated by the pan-Canadian Pharmaceutical Alliance and set by provincial or territorial governments on their drug benefit plan formularies,” said Jeff Connell, vice-president of corporate affairs at the Canadian Generic Pharmaceutical Association (CGPA).
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“These negotiated prices also apply to Canadian patients who have drug coverage through their employer’s plan, or pay for their prescription drugs out-of-pocket,” he told Global News.
Can Canada weaponize medications in a trade war?
Canada is “heavily” reliant on other countries like the United States, India and European nations for active pharmaceutical ingredients and finished dose products, according to a 2022 report prepared for the CGPA.
“Almost all [active pharmaceutical ingredients] used to manufacture medicines in Canada come from abroad,” the report said.
“There are concerns when Canada relies predominately on a handful of foreign countries to secure sufficient supply in order to manufacture medicines domestically.”
It’s not yet clear if drugs will be exempt from Trump’s paused threat of across-the board 25 per cent tariff on Canadian goods, minus energy which would face a 10 per cent tariff.
Canada’s list of counter-tariffs on the U.S. does not include pharmaceuticals.
Tadrous is hoping drugs and medicines, especially critical ones, are excluded from a trade war so patients don’t end up paying the price for it.
“At the end of the day, we just want to make sure that the patients that need the medications get them,” he said.
As tariff tensions between Canada and the U.S. simmer, a growing “buy Canadian” movement is gathering steam, with consumers ditching U.S. products for local ones.
Daniel Trefler, professor of economics and international trade and competitiveness at the University of Toronto, said while focus during a trade war might be on items like groceries and consumer goods, pharmaceuticals make up a big part of trade, too.
“We tend to think about the world in terms of consumer-facing goods like the blueberries we eat, like the clothes that we wear. But that is a small fraction of the entire economy, and it’s a small fraction of how we interact with the United States,” he said.
“The big things that we interact with the United States, for example, are pharmaceutical companies and all of those social media platforms and Google search engines, etc.”
“That’s where the big bucks are for Americans,” he told Global News.
To make a tangible impact, he advised Canadians to ask for a local alternative for generic medicines on their next trip to the pharmacy.
If a trade war does start, Tadrous said Canada can’t rely on self-sufficiency for thousands of different pharmaceutical products.
He said more than 80 per cent of all drugs in Canada and the U.S. are produced outside of their own borders, and added if tariffs are imposed on medicines, public payers and insurance companies across both sides of the border will have to adjust how they cover the cost of these drugs.
“I think in the short term, we don’t anticipate that there’s going to be any major pressure on drug prices, but I think in the long term, it can have some serious effects on our supply of drugs,” he said.
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